Last Friday Edition:
We take a break from getting into the numbers to learn more about the industry and products.

TLDR: Sake’s surface is slightly scratched

We talk quite a bit about white space in this newsletter: the holes in the portfolios of the strategics.

White space is important because it is one of the biggest contributors to successful M&A.

White space can come from a multitude of factors:

• Price Point: A $200 bottle of whiskey doesn’t compete with Fireball

• Spirit: Pretty hard to sub in vodka for an old-fashioned

• Flavor Profile: Even harder to sub in sour pickle vodka in an old-fashioned

The market is dominated by a few strategics with stacked portfolios so finding white space is becoming increasingly difficult…

But not impossible.

Interest in global flavors combined with the increased purchasing power of minorities, is creating new white space.

There’s one category in particular I have my eye on:

Sake (sans bomb)

Sake is brewed (not distilled) with rice and Koji (think malt for beer)

Sake is typically 15% alcohol so slightly stronger than wine and can be served hot or cold.

My favorite fact about sake?

You’ve never had it before

I don’t want to undermine your rich collegiate experience, but if you live in the U.S. you have probably never had genuine sake.

I had the opportunity to visit Japan a few years back with a couple of friends.

We toured a sake brewery which finished with a tasting and lesson.

The history and variety within Sake as a category is akin to wine and wildly fascinating.

But the most interesting thing I learned:

Traditional, fresh Sake has an extremely short shelf life of less than a week.

To make it more feasible for distribution and use within Japan, the Sake is pasteurized to extend its shelf life.

That helps, but to give it the necessary shelf life for international distribution, it is pasteurized a second time.

So almost every bottle that ends up in the United States is an uber-sterilized version of true Sake.

We all know Sake as a crisp, clear drink with subtle flavors, but genuine Sake is overwhelmingly rich in taste and texture.

Huge Domestic Opportunity

Growth in demand for Asian flavors and beverages in the US is exploding.

Imported Sake is delicious, but the shelf life limitations create a unique opportunity for a lively craft scene here in the US creating flavors and freshness you can’t import.

Sake has less sugar, sulfites, and acid than wine and other alcoholic drinks.

It’s resilient to seasonality, consumable in both hot or cold form

Sake breweries have started popping up in the United States, but they face an uphill battle of changing the American view of Sake as a cheap novelty.

I’m rooting for them.